Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation, National Association — Q3 2018 Earnings Presentation
23 slides from Zions Bancorporation N.a's earnings presentation, Oct 22, 2018
Slide 1: Third Quarter 2018 Financial Review
Third Quarter 2018 Financial Review October 22, 2018
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information The attached presentation includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in the attached presentation
Slide 3: Third Quarter 2018 Financial Highlights
Third Quarter 2018 Financial Highlights Continued PPNR growth and improved profitability EPS: Diluted earnings per share increased from the year-ago period, to $1.04 in 3Q18 from $0.72 • Notable items that are operating but believed to be infrequent included: • $0.01 per share of interest recoveries
Slide 4: Earnings per Share
Earnings per Share EPS increased 44% over the prior year, assisted by strong positive operating leverage Diluted Earnings per Share Diluted earnings per share increased to $1.04 in 3Q18 from $0.72 in the $1.20 year-ago period $1.09 $1.04 $1.10 Infrequent items of: 3Q18 of $0.04 per share from: inter
Slide 5: Balance Sheet Profitability
Balance Sheet Profitability Zions’ profitability continues to improve Return on Assets Return on Tangible Common Equity 1.6% 15.5% 16.0% 1.45% 1.33% 14.2% 1.4% 14.0% 14.0% 12.4% 1.32% 1.19% 1.2% 12.0% 12.5% 12.3% 1.18% 1.18% 0.97% 9.8% 1.0% 10.0% 0.88% 10.1% 8.4% 0.74% 0.8% 7.4% 8.0% 0.68% 0.74% 0.5
Slide 6: Pre-Provision Net Revenue
Pre-Provision Net Revenue Year-over-year 15% improvement, excluding interest recoveries Adjusted Pre-Provision Net Revenue (1) ($mm) $300 Adjusted pre-provision net revenue: (2) (2) Up 16% over the past year and 98% (2) since 4Q14 $250 Up 15% and 96% over 3Q17 and 4Q14, respectively, after adjusting
Slide 7: Credit Quality
Credit Quality Strong and improving credit quality Key Credit Metrics: Credit Quality Ratios Classified loans (1.7% of loans) 4.00% Declined 37% from the prior year 3.50% Declined 17% from the prior qtr NPAs+90 (about 0.7% of loans + OREO) 3.00% were 2.50% Declined 41% from the prior year Declined 1
Slide 8: 2018-2019 Objectives
2018-2019 Objectives: Growth through simplification and focus Demonstrate positive operating leverage by: Achieving broad based loan growth; major loan portfolios within acceptable concentration limits Building on momentum from noninterest income growth initiatives Managing noninterest expense growt
Slide 9: Net Interest Income
Net Interest Income Growth due to combination of wider net interest margin and loan growth Up 8% over the year-ago period, to Net Interest Income $565 million ($mm) Adjusted (1) net interest income up $40 $575 million, up 8% over the prior year (1) $550 period (1) (1) Majority of the increase attrib
Slide 10: Net Interest Income Drivers: Average Loan and Deposit Growth
Net Interest Income Drivers: Average Loan and Deposit Growth Moderate balance sheet growth is expected to be a key driver of Zions’ positive operating leverage Average loans held for investment: +4% over the year-ago period Average deposits: +3% over the year-ago period Improvement despite rising in
Slide 11: Net Interest Income Drivers: Loan Growth
Net Interest Income Drivers: Loan Growth Moderate to strong loan growth achieved in certain targeted growth categories Year-over-Year Loan Balance Growth Total Loans: +4% Year over year: Loan growth predominantly in Note: circle size indicates relative proportion of loan Residential Mortgage (1-4 Fa
Slide 12: Net Interest Income Drivers: Yields and Costs
Net Interest Income Drivers: Yields and Costs Expansion of NIM reflects a higher loan yield with only a moderate increase in funding costs Relative to the prior quarter, the Net Interest Margin (NIM) NIM: +7 bps to 3.63% 5.0% Loan Yield Interest recoveries on loans in 3Q18 were $3 4.5% million, or a
Slide 13: Noninterest Income
Noninterest Income Continued focus on fee income Customer-Related Fee Income (1) ($mm) Customer-related fee income up 2.5% from the $150 year ago period, primarily due to increases in: Loan fees (primarily syndication fees) Bankcard fees $120 $127 $125 Corporate investment services $122 $125 $123 Tr
Slide 14: Noninterest Expense
Noninterest Expense Focus on “Simple, Easy, Fast” expense controls and streamlining while hiring in revenue-generating areas Noninterest Expense Total noninterest expense up 1.7% from the year-ago period (1) ($ millions) Adjusted noninterest expense(2) up 0.5% from the year-ago period due to: $428 $
Slide 15: Efficiency Ratio
Efficiency Ratio Substantial improvement since 2014 driven by both revenue growth and expense control Efficiency Ratio (1) 75% The efficiency ratio in 3Q18 was 58.8% 74.1% Excluding interest recoveries(2) the efficiency ratio was 59.1% 70% The YTD Efficiency ratio was 60.3%, 69.6% excluding interest
Slide 16: Next 12-Month Financial Outlook (3Q19E vs. 3Q18A)
Next 12-Month Financial Outlook (3Q19E vs. 3Q18A) Outlook Comments Slightly - • Possible slight slowing of growth vs. 3Q18 of 5.1% (annualized) due to Loan Balances Moderately increasing market pressure on loan pricing and structure Increasing Net Interest Income Moderately • Excluding interest inco
Slide 17: Appendix
Appendix Financial Results Summary Impact of Warrants Loan Growth by Bank Brand and Loan Type Interest Rate Sensitivity GAAP to Non-GAAP Reconciliation 17
Slide 18: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) September 30, June 30, September 30, 2018 2018 2017 Earnings Results: Diluted Earnings Per Share $ 1.04 $ 0.89 $ 0.72 Net Earnings Applicable to Common Shareho
Slide 19: Impact of Warrants
Impact of Warrants Potential dilution is expected to be slight to moderate, depending upon future stock price Zions has two tranches of warrants outstanding (ZIONZ and ZIONW), both of which are currently in the money During 3Q18, 565,566 warrants were exercised ZIONZ warrants expire on November 14,
Slide 20: Loan Growth by Bank Brand and Loan Type
Loan Growth by Bank Brand and Loan Type Year over Year Loan Growth (3Q18 vs. 3Q17) Zions ZBNA (in millions) Amegy CB&T NBAZ NSB Vectra CBW Total Bank Other C&I (ex-Oil & Gas) (148) (499) 339 67 12 99 39 - (91) Owner occupied (ex-NRE) 176 200 70 12 33 (24) 49 - 516 CRE C&D 132 (18) (16) 98 (35) (47)
Slide 21: Interest Rate Sensitivity and Historical Deposit Beta
Interest Rate Sensitivity and Historical Deposit Beta Zions remains moderately asset sensitive, with a loan profile that is weighted towards a one-year reset Net Interest Income Sensitivity 2004-2006 and 2015-3Q18 Rate Cycles Percent Modeled Annual Change in a 6.0 +200bps Interest Rate ZION Cost of
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 3Q18 2Q18 1Q18 4Q17 3Q17 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 420 $ 428 $ 412 $ 417 $ 413 Adjustments: Severance costs 2 1 - 1 1 Other real estate expense 1 - - - (1) Provision for unfunded lending commitments - 7 (7) (1) (4) Deb
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 3Q18 2Q18 1Q18 4Q17 3Q17 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $420 $428 $412 $417 $413 LESS adjustments: Severance costs 2 1 - 1 1 Other real estate expense 1 - - - (1) Provision for unfunded lending
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